Euro Bulls May Soon Have Their Day in the Sun

Our “Pro Service Outlook 2015″ FREE video event introduces you to the near- and long-term forecast for the world’s most popular FOREX markets — and so much more

By Elliott Wave International

As the euro clings to the guardrail of a 7- (no, wait) 9- (Doh! there it goes again) now 11-year low, debate over the future of the eurozone’s currency rages on. And in the mix, the ultimate four-letter FOREX word just reared its ugly head: PARITY.

“The euro is likely to reach a 1-1 ratio with the dollar for the first time since 2002.” (Feb. 2, Wall Street Journal)

Amidst the flurry, we’d like to focus your attention on another word — CLARITY — and invite you to take an objective step back and evaluate why the euro is where it is today.

First, you have to go back to the beginning of the euro’s dramatic sell-off, to the early part of last year. At the time, the euro was orbiting a 2.5 year high against the U.S. dollar having soared 15% from its 2012 bottom. The strongest thing we remember about this time, though, was how certain mainstream analysts were in the euro’s ongoing upside potential.

There were, after all, plenty of “fundamental” reasons to embolden the bullish claim, such as: strong eurozone economic data, growing demand for the euro’s perceived safety, and most of all, an accommodative monetary policy by the European Central Bank.

In March 2014, ECB President Mario Draghi gave the ultimate green light to euro bulls: Draghi called the eurozone economy an “island of stability,” and foresaw no need for radical, currency-debasing rescue efforts such as rate cuts or quantitative easing. Here, these news items from the time set the scene:

[edit] Since we are on the subject, I wanted to pass on this simply poetic quote from EWI’s Steve Hochberg. I read it and smiled ear to ear…

Everyone “knows” the [Euro] cannot possibly rally with the ECB printing money and global sovereign interest rates at essentially zero. Or can it? Currency moves often create great Elliott waves because in 2015 the very nature of a currency is amorphous. None are rooted to anything tangible, such as gold. They are simply “quotes” relative to other currencies and therefore a manifestation of ephemeral states of mind. The collective changes in states of mind are not random: they are patterned according to the Wave Principle model.

He then goes on with his forecast for USD and Euro, but I wanted to highlight this because he just spoke my language perfectly (better than I could, actually), aside from the Elliott Wave stuff.

Outlook 2015: New Perspectives on Euro, Gold & Crude Oil

Experienced traders say that sometimes, just 2 or 3 good trades make their entire year.

True: If you get in early and ride the trend for a few weeks or months, that may be all you need. That’s why having a perspective on the markets is so important.

That’s also why Elliott Wave International hand-picked the best clips from their trader-focused “Outlook 2015″ video series to share with you and give you a fresh perspective in 5 key markets: EURUSD, EURJPY, GBPJPY, Crude Oil & Gold

Each of the four videos will show you the market’s big Elliott wave picture, give you a forecast for the weeks and months to come — plus several short, punchy, market analysis lessons in Elliott waves/technical analysis you can use again and again.

Crude Oil Leads the Euro

February 12, 2015

There is information about the future of the euro, and it is hidden in plain sight, right in the chart of crude oil prices.

This week’s chart reveals that relationship, which is yet another example in a long series of what I call “liquidity wave” relationships. That refers to the phenomenon of a price structure appearing in one market’s price plot, and then appearing again sometime later in another. I liken it to an ocean wave appearing at the end of a pier, and then hitting the beach several seconds later. If you can figure out what price series represents the end of the pier, and what other one responds later, that can be terribly useful information.

History In the Balance: Why Greece Must Repudiate Its “Banker Bailout” Debts And Exit The Euro

Now and again history reaches an inflection point. Statesman and mere politicians, as the case may be, find themselves confronted with fraught circumstances and stark choices. February 2015 is one such moment.

For its part, Greece stands at a fork in the road. Syriza can move aggressively to recover Greece’s democratic sovereignty or it can desperately cling to the faltering currency and financial machinery of the Euro zone. But it can’t do both.

So by the time the current onerous bailout agreement expires at month end, Greece must have repudiated its “bailout debt” and be on the off-ramp from the euro. Otherwise, it will have no hope of economic recovery or restoration of self-governance, and Syriza will have betrayed its mandate.

Moreover, the stakes extend far beyond its own borders. If the Greeks do not take a stand for their own dignity and independence at what amounts to a financial Thermopylae, neither will the rest of Europe ever escape from the dysfunctional, autocratic, impoverishing superstate regime that has metastasized in Brussels and Frankfurt under cover of the “European Project”.

Would a Gold Standard Brighten Economic Outcomes?–Big Picture[biiwii comment: the old argument… the author’s conclusion is laughable as practically applied by today’s CB’s (“a gold standard is not needed to preserve price stability as long as a country’s central bank is independent and has a clear mandate to achieve price stability“), but a gold standard for a modern financial and economic system is not the answer; discipline and transparency are the answers in large part imo; esp. discipline, which is lacking world-wide]

The focus over the last few days has clearly been central bank follies. In just the last week:

The Swiss National Bank (SNB) abruptly stopped trying to hold down the Swiss Franc from rising against the Euro; the currency immediately rose 20% against the continental currency (see chart, source Bloomberg). More on this below.

The slide in the value of the euro currency in 2014 was epic, and it makes me leery about wanting to catch a falling knife. But there are 3 big clues that an upturn for the value of the euro is coming. How much of an upturn is not indicated, but it should at least be a noticeable upturn in the charts.

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Nothing you read on this site is to be considered investment advice, recommendation or any other such call to action. I trade my own accounts and occasionally make note of a position and often make note of current market views. Being human, I am subject to bad trades and ill-conceived ideas just like anyone else. Do your own due diligence with individual equities and in your own macro work. See 'About & ToS' link above for full Terms and conditions.